What CUs should consider when planning a digital currency strategy

As crypto adoption increased, many credit unions have experienced significant outflow of member funds, yet 81% of their members want to buy digital assets from their primary financial institution, which provides a great opportunity for credit unions.

The reality is, even with the market downturn, enthusiasm for crypto isn’t going away and financial institutions are faced with decisions to make:

• Option 1: Take a hands off approach as there are retail crypto apps their members can use
• Option 2: Proactively offer crypto products in your banking services

Consider Option 1: Members will seek other ways to obtain digital assets, which likely leads to increased outflow of funds and member churn. When the market returns to all time highs, outflows could increase 3-4 times and it will be harder to attract and retain younger members who expect crypto as part of their asset portfolio.

Now, let’s look at Option 2: By providing this support directly, members will be able to purchase digital assets directly from their bank account, which translates into keeping those funds within your ecosystem and understanding needs within this ecosystem. In addition, it provides increased member retention and acquisition and a path to generate non-interest revenue. It will also provide opportunities for educating your member base about responsible investment in this space.

If you take option 2, here’s what to consider:

1. What are the member attitudes in regards to crypto?
2. What products best fit member needs?
3. How do you launch compliant and accessible crypto products?

Understanding member attitudes towards crypto

Many credit unions I speak to jump directly into regulatory, compliance, and vendor details. But the forward-thinking credit unions almost always start with understanding their core member base attitudes towards crypto. Are members crypto-curious (i.e. “There’s a lot of work involved in investing in digital assets ”)? Are they crypto-enthusiasts (i.e. “I actively trade and want to grow my investment portfolio ”)? Or are they in-between?

Choose products that best fit your member needs

Once you build a strong understanding of your members and their interest in crypto, you need to decide on products that best fit their needs. Do members want access to more than just Bitcoin? Do members prefer automated transactions to simplify their investing experience? How can you include education in the investment experience?

Decide how to deliver crypto products to your members

After assessing the WHY (members’ demand for crypto) and WHAT (the product you will offer them), your focus should be on the HOW (how to deliver the product to members). In this phase, you’ll need to understand how to offer digital assets without keeping them on your balance sheet, compliance requirements, custody and wallet security, product flows and the best partners for the journey.

One of the lasting effects of the pandemic is that people want to do banking differently. They want more options and they want them delivered simply. Avenir’s assessment is that we’re going to see massive transformation in digital asset adoption over the next five years and now is a great time to understand, experiment and determine what options fit best with your financial institution, to ensure you are keeping up with market trends.

Now will be a good entry point when we look back at it.

If you want to learn more about how to launch compliant, simple, and accessible crypto products to your members without budget resources for a big engineering team, reach out to us at Avenir.